How to get rid of credit card debts? This is one of those simple questions that don’t necessarily have a simple answer.
Anyone with credit card debt can tell you how stressful they can be, particularly when they are maxed out or when minimum payment letter arrive in your mail. The lure of buying something now and worrying about payments later has led to Australians accruing 32 billion dollars of debt collectively or $4200 per person.
Happily paying off your credit card debt is very possible and not as hard as it may seem. I reached out to 31 money-saving experts and asked them:
What are your top 3 tips to get rid of credit card debts?
And the answers provided are nothing short of amazing. If you want to get rid of your credit card debt then the aswer for you is below:
After cutting up the credit cards, I recommend you pay off all your debt using the Debt Snowball method.
Step 1: List your debts from smallest to largest.
Step 2: Make minimum payments on all your debts except the smallest.
Step 3: Pay as much as possible on your smallest debt.
Step 4: Repeat until each debt is paid in full.
My top three tips for getting rid of your credit card debt:
1. If you are eligible, do a ‘0% interest’ balance transfer deal (18-24 months usually, and you won’t be charged interest during that period)
2. Make the end of the 0% interest period your deadline to pay off the debt. At least double your minimum repayments on the card/s, though if you can make 10x (or more) the monthly minimum payment, do it.
3. If you decide to keep a credit card: drop your limit to $500, go into the bank and sign a form that says to pay off the full balance each month automatically from your savings account. Your job is then to make sure you have enough in your savings account each month to pay it off. If you spend more than $500 a month on the card, you can make extra interim payments to clear your balance. Voila! Never pay interest again.
Unlike The Barefoot Investor, I think having a credit card makes sense if you are going to purchase anything online because of the fraud protection it offers.
Here are three of my favorite tips:
1. Raid your emergency fund. If you take emotion out of the equation, using low-interest savings to pay down your high-interest credit card debt makes good financial sense. And remember, you should always be able to tap your credit card should a crisis arise.
2. Take advantage of financial windfalls. Cash earned from overtime, tax refunds, and even garage sales can help you pay down your credit card balances faster.
3. Pick up a side-hustle. If you’ve got the time, find alternative ways to make extra money that can be applied to paying down your credit card debt.
My top 3 tips for getting out of credit card debt:
1. Know when to cut them up. If you’re a serial credit card debter then it may be time to give them up. Credit cards aren’t bad but they’re not for everyone and having money in the bank is more important than airline miles.
2. Make a budget. If you’re making getting out of debt a priority then you have to assure your money will go to debt payments and not “emergency” pizza orders. Having clarity on your income and expenses is essential to paying off credit card debt.
3. Try a no-spend challenge. Everyone’s doing some kind of challenge from weight loss to cooking. Challenging yourself to not spend your money on certain things (or all superfluous things) can kick-start your repayment and amp up your motivation.
1. Take a deep look at your monthly expenses. The latte here and there or the avocado toasts will not make or break your budget but a $600+ a month car payment might. Cars and Housing expenses are the hardest to change but anything can be done. Never think that you are stuck somewhere or that you ought to keep your car. In the end, it’s just stuff.
2. Cut down a bit, one expense at the time. If you go out to eat every week, try to go every second week. If you have a huge house, try renting out some rooms like we did.
3. Make it a habit to save and to pay off debt. Try to set up most of your savings and repayments on autopilot. We set aside an amount at every paycheck and it all works automatically. Also, make it a habit to live with less. The less stuff you need, the more you can save and pay off debt faster.
I myself paid off over $10,000 of credit card debt and my top tips for others are:
1. Stop using your cards! Shred them. Freeze them in ice. Put them in a hard to reach location. Do whatever you need to do to make it hard to get to your cards so you can stop using them.
2. Pay off your smallest balance first. Even though paying off the higher interest rate card first may save you slightly more money in interest, paying off a smaller balance first will help you feel like you’re making progress and keep you inspired to keep going!
3. Make short-term sacrifices for long-term gains. When I first started paying off my credit card debt, I decided that I had to cut everything from my budget except the essentials. I also took on a part-time weekend job and worked 6-7 days a week between my full-time job and part-time job. This helped me pay down my debt a lot faster. Even though it sucked at the time, I knew that these short-term sacrifices would allow me to get ahead and be happier in the long-run.
1. To get out of credit card debt, my clients need to stop using their cards without canceling credit card accounts. Canceling accounts could negatively impact credit scores. Instead, put the cards away in a safety deposit box or in a pan of water and freeze them. For those that know their credit card numbers by memory and find it difficult to stop spending habits, I advise them to take the hit on their score and cancel the account.
2. Utilize a free online tool called powerpay.org to enter debts and calculate the best method to pay them off.
3. Breathe. Credit card spending is a means to an end of instant gratification that later results in buyer’s remorse. Before making a credit card purchase, I urge my clients to pause, breathe and think. Often, a few days of thinking results in a realization that the purchase isn’t worth the debt after all.
My top tips would be:
1. Keep a record of your outgoings and income and track how much you are spending each month on bills, luxuries and travel etc. It is the first step to seeing how much income you have available to overpay on credit cards and will help you know where you can cut-back on any bad spending habits
2. Pay the overpayments to the highest rate cards first as these will take the longest to clear otherwise and cost the most interest.
3. If possible look at transferring balances to another provider which offers a 0% interest period which will allow any payments and over payments to go further reducing the balance rather than paying off interest. If a balance transfer is not possible consider consolidating the debt into a loan which will typically reduce the rate of interest paid and set a clear end date for the repayment of the credit.
1. Make it a priority to get out of debt. It’s one thing to hope for it, but you’re more likely to do something about it if you commit to it.
2. Become mindful of your spending. Making yourself more aware of how you are spending your money in a world where it’s far too easy to spend money can help you increase the amount you have available for debt repayment.
3. Choose a method of repayment that works for you. Some people choose to pay off the credit cards with the highest interest rate first, since that will lead to paying less interest. Though, for some, paying off the lowest balance cards first can give you the confidence to keep going once you start wiping out balances.
Understand your loans. The first step to managing your debt is working out what you are dealing with. How much do you owe on each loan? What are the interest rates? What are the minimum repayments? Knowing this will allow you to decide where to direct your repayments in order to pay off your loans quicker and avoid late repayment fees.
Complete a budget. Putting together a budget will allow you to understand your income and your expenses. While the purpose of completing a budget is not necessarily to reduce your expenses, you may find that you have expenses you could eliminate during the process.
Decide on a repayment strategy. Some examples of repayment strategies are: Avalanche – Pay off highest interest rate first and the Snowball – Pay off lowest principal first.
Make extra repayments. By making extra repayments on your loans when you can, you’ll pay off your debts faster and save on interest. If you choose a loan at a fixed rate, you may not be able to make extra repayments without incurring extra fees.
Find a cheaper interest rate or ask your current lender to match the best deal. Shop around to find a credit card that offers a lower interest rate than your current one(s). A credit card that offers a honeymoon or introductory rate can be good but you need to check that it is right for you.
The savings tend to be short-lived and once the honeymoon period ends, you could end up with a more expensive interest rate.
Calculate how long it will take to repay your debt. There are many online tools and mobile apps that will allow you to enter your existing debts and your current repayments allowing them to calculate when your debts will be paid off. Unbury.me and Debt Eliminator are examples of these.
Stick to the plan. If you want to achieve your goal, it is important that you regularly check in and ensure that you are on track by reviewing the steps above.
Working in an around personal finance every day, I can relate to those affected by credit card debt.
Here are a few tips I have:
1. Understand your debt payments before starting your debt free journey. Randomly allocating bits of cash to each card is guaranteed to extend the payoff period far longer than it needs to be. Instead – put all your extra cash towards the smallest card whilst making minimum payments on the others. Rinse and repeat.
2. Bargain. We’re Aussies – it’s what we do. Threaten to leave your current financial provider and move on if they don’t reduce your rates. Of course, make sure you have better deals from their competitors before actually leaving.
3. Understand that it’s not going to happen overnight. Paying off debts requires two things – consistency and discipline. Be prepared for a battle ahead and know it’s not going to be easy. That way, when the tough times come, you’re well suited to take them on.
Lastly – tips like these are only good if you act on them. So, finish reading this article, and take steps towards achieving your debt free goals immediately.
Regardless of how much credit card debt you have, there are three easy steps every Australian can take in order to pay down their debt quickly and easily.
1. Pay more than the minimum amount
One of the best ways for people to pay off their credit card debt quickly is to make more than just the minimum repayments each month.
The minimum payment is usually 2% of your closing balance. This needs to be paid back by a due date to avoid a late payment fee and interest costs.
However, if you only pay back the minimum each month, you will end up carrying the debt for an extended period of time.
For example, if you owe $4,000 on your credit card and you only make the minimum repayments of $80 a month, based on the average credit card interest rate of 15%, it will take you more than 21 years to pay it off. Meanwhile, if you make monthly repayments of $200, you’ll have your credit card paid off within two years.
2. Switch credit card lenders
Switching to a different lender may help you pay off your debt faster.
A number of banks offer balance transfer credit cards with a 0% interest rate for a limited period of time.
By switching to a different lender and taking advantage of the low or 0% interest rate, you should be able to pay off your debt in a timely manner.
If you are thinking about switching lenders, it is important to keep in mind that you may be charged a one-time balance transfer fee as well as an annual fee. In addition, once the promotional period ends, your interest rate will revert to the lender’s standard rate.
3. Consolidate your credit card debt with your mortgage account
If you follow the first two steps and still struggle to pay off your credit card debt, it may pay to speak with your local mortgage broker about debt consolidation.
By consolidating your credit card debt into your home loan, you will effectively reduce your interest rate, which will make your regular repayments more manageable.
In addition, you do not have to worry about different debt obligations, as you’ll only have one regular loan repayment to make. However, do not fall into the trap of being too relaxed, always put as much as you can towards your debts.
My top three tips to get rid of credit card debts are:
1. Create a cash flow chart for yourself. You need to pay expenses to live, such as rent, phone, and necessary utilities. Beyond that, you need to cut the unnecessary items and put the remaining money to pay down your credit card debt.
2. Cut the landline; cut cable – look at your bills and cut the unnecessary stuff if you have high credit card bills. You need to get serious if you will ever get out of debt.
3. Put money in your 401k plan; you will reduce your taxes, save for later in life, and it forces you to live on less.
I didn’t buy anything new or 2nd hand in 2014 and saved 38% of my take-home salary ($52,680). I changed my spending and transformed my savings. It started as a lifestyle experiment, but it changed my life, so I kept on going.
My top 3 tips to get rid of credit card debt are:
1. Write your passion list
2. Lock away your credit and debit card
3. Get a 90-day waiting list
Getting out of credit card debt can be an arduous process, especially considering the APR percentages that vast majority of credit card providers impose. It may be difficult, but certainly not impossible to get out of the credit card debt with some budgeting, a plan, and a proper money management.
Here are the top three tips for getting out of credit card debt:
1. Credit card balance transfer to 0% APR. Once you decide to get out of debt, transferring the balance would be the very first step. This will allow you to start paying off your credit card without having to pay off the incurring interest. It is also a great motivator as these transfers usually have a time limit on the 0% APR. This can be incorporated as a part of a plan for paying off the debt and it will help you manage your spending during that time.
It can be very tempting to start spending again on the new interest-free credit card, however, this will mean only getting more into debt and any further spending, in any capacity, should be curbed from this point on. Destroying the credit card would be a good way of making sure you’re not tempted.
2. Create a budget plan. Credit cards are convenient because they allow us to pay for something without actually having money in our bank account at that moment. This is a slippery slope as spending can get out of hand and it is easily justified by spenders by convincing themselves that they’ll pay it next month. Because of this, budgeting tends to become ‘flexible’ to the point of spending more than we’re capable of paying back at the end of the month. This is where the budget plan comes in.
Although this may seem cliche, it is actually an excellent way to plan how the money will be spent and how much of that money will go towards paying your credit card debt. Once you get comfortable budgeting and pay off the debt, it will become invaluable when it comes to savings too.
3. Set up a direct debit to the credit card. Once the budgeting has been done and you see how much you need for the bills and how much you can afford to pay the credit card each month, relative to the time allocated for the 0% APR, set up a Direct Debit from your account to your credit card. Because no interest is incurred during this time, you will be able to calculate exactly how long it will take the pay off the debt if a certain amount is allocated to the credit card debt. Not only that, you will be able to see the balance going down month by month as no interest is being added.
If your credit card debt is too large and you are not in a position to pay it within the allocated time of the 0% APR, you can always move the remaining balance to another credit card. Be warned, however, if you keep switching and not paying off the debt, but rather spending, your debt will grow exponentially. There is no workaround to paying off the debt, but there are options that will allow you to do this efficiently once you’re committed to doing so.
I have been doing mortgages for 20+ years; which means I have met thousands of people who have gotten themselves into less than ideal financial situations.
Here are my recommended 3 steps; assuming someone is carrying credit card balances month to month and has a decent credit score.
1. Dramatically curtail credit card use. Ideally, stop using credit cards completely until such time as you can pay off the balance in full each month.
2. Reduce the interest charges you are paying on your credit cards. A dollar saved in interest is a dollar more you have to pay down principal. Use balance transfer offers which have 0% (or near 0%) interest rates and allow for extended pay periods (typically 12-24 months).
3. Live on a budget and pay additional principal until it hurts.
It takes work; and is much more easily said than done, but the payoff is worthwhile.
Mayra Araujo – Lemoney
Here are my top 3 tips:
1. Create a budget
Creating a budget is not easy, especially when you’re not making a lot of money. I think the most important is to put every single thing you buy on an excel sheet. Really, everything. Took the subway? Sheet. Bought a candy? Sheet. Paid your phone bill? Sheet. It’s annoying at the first, but keep a little notebook and a pen wherever you go, and write it down as you buy. By the end of the month, see how much you spent, and highlight what is important (bills) and what is not important (candy). Does that mean you should never buy candy? Of course not – after all, it is your money. But, if you put everything on a sheet, you may realize that you’re spending too much with things you didn’t want that much.
2. Buy things with cashback
There’s absolutely no reason, especially if you’re on a budget, to buy things without getting part of the money back. Cashback & Coupon sites are great for buying things you need to have – like supplies, groceries, hygiene items, etc. Lemoney, for example, offers the best cashback countrywide and coupons over 1500 stores.
3. Make a plan
Living a life without spending a lot (when you don’t have a lot to spend) is great. But be sure you have a goal of saving this money, otherwise, you may get tired and spend on a night out what you saved for months. If you stay a long time saving, it may become natural – but, for now, set a goal and a date.
Top three tips to get out of credit card debt is to:
1. Stop using it temporarily.
2. Make more than the minimum payment.
3. Take note of your credit card’s billing cycle or “statement close” date which is different from your payment due date. The billing cycle of statement close is when the interest is tacked on.
3.5. Cut back on some of your lifestyle choices to “boost” your income and help you pay down your debt faster.
Credit cards are not so bad and can be a wealth builder when used appropriately.
My top 3 tips to get rid of credit card debt are:
1. Target one card at a time.
To get started on paying off your credit card debt, you need to figure out which card you owe the most on. Then you can start paying off the credit card in the top spot while putting the other card payments on autopilot with a minimum balance payment. Make sure to set aside a set amount of money each month to put toward the first card, then continue down your list once each one is payed off. By targeting one credit card at a time, you will make faster progress and gain momentum towards paying down your entire credit card debt.
2. Negotiate for a Lower Interest Rate
With just a short phone call, you could save yourself hundreds—or even thousands—of dollars on interest payments. Call your credit card’s customer service department and request a lower interest rate on your account. Be sincere, polite and firm in negotiating for a lower rate, and ask that they review your account for eligibility. If the creditor declines your request, there’s no harm done and you can be sure you did everything you could to save money on interest payments.
As a secondary option, you may consider transferring some of your balances to a credit card with a lower APR. Since creditors often have multiple cards available, inquire about the other cards and interest rates to see if you qualify for a new card.
3. Make Multiple Payments Toward the Balance
Instead of making one large payment each month, try making several smaller payments. Set up weekly or twice-a-month payment reminders and split your payments in half. Not only will this be easier for you to budget, depending on your paycheck cycle, but you’ll be saving more money on interest since you’re not waiting the full 30 days to make a payment.
Keep in mind that some credit card companies may have a limit on how often you can make payments, so be sure to check their fees and other terms. You don’t want to pay additional fees just to make payments on your debt.
Literally, freeze your credit cards in ice so you can’t access them without waiting for the ice to melt. It forces people to think twice about using the cards.
Take all credit cards out of your wallet or purse so they are not on your person when you are out and about to eliminate the temptation to use them.
Focus on paying off the highest interest bearing cards first. If you have several cards, pay off the small balances so that it feels like you made a dent in the number of cards paid off.
As you pay off a card, use that same amount to double down on the next card. Continue this strategy until you have them down to zero.
According to a recent study, the average household has a total of $16,748 in credit card debt so you are not alone!
Start paying with cash. It is important to not add to your debt, so leave your credit cards at home and start paying with cash. Credit card debt is tricky and once you’ve started accruing debt, it is hard to stop. By paying with cash you will avoid taking on extra debt and higher interest payments. Cash allows you to limit your purchases to items you can only buy with the money you have available.
Look into the interest rate and/or a balance transfer card. When paying down debt, analyze the interest rates you’re charged. Credit card debt with the highest interest rates should be paid off as soon as possible since you’re basically paying a credit card company to hold a balance for you. If you cannot afford to pay off your debt quickly, consider a balance transfer credit card. You could save money, hundreds or thousands of dollars, on interest fees alone by transferring existing credit card balances to a lower annual percentage rate (APR) credit card.
Balance transfer cards can be risky if you do not select the right one or forget to make at least the monthly minimum repayments. Look for a card with no annual fee, a longer promotional period, lower interest rates and low balance transfer fees.
Consider cutting back and/or trying a side hustle. Take a hard look at your finances to see where you can “trim the fat.” Instead of paying $40 a month for a gym membership, cancel the membership and put $40 a month towards your savings or paying off additional debt. Cancel your subscriptions and put the payments towards your debt.
You can also consider a side hustle to make extra money. There are a variety of part-time gigs you can take advantage of such as: driving for Uber/Lyft, selling your unwanted items on Poshmark or Ebay, help others with tasks on TaskRabbit, babysitting, or profiting from a hobby on Craigslist or Etsy.
1. Utilize a Home Equity Line of Credit
Some may view this as dangerous (i.e. taking on more debt to pay down existing debt), but few things are more debilitating than credit card debt (interest rates 18%+). By utilizing a HELOC, you can at least transfer the credit card debt to lower interest HELOC debt (rates currently hovering around 4.25%).
2. Start making lifestyle sacrifices
I’m not saying that you begin eating spam and cans of tuna fish for dinner, rather I’m suggesting that individuals burdened by credit card debt must scale back the everyday luxuries. Whether it’s eating out regularly, or buying coffee daily, anything that erodes your ability to save should be reevaluated. Make food and drinks at home, limit the seemingly small regular expenses.
3. STOP USING YOUR CREDIT CARD
There are few things more convenient than swiping a credit card. This convenience was likely the key perpetrator in the debt buildup in the first place. If you find yourself in credit card debt, while you are the one who needs to be held accountable, you also have to part ways with your partner in crime (i..e. THE CREDIT CARD).
1. Track your cost: To write all of your regular, committed expenses (Mortgage, utilities, insurance, car payment, cabal etc.) and track your variable expenses such as restaurant meal, entertainment, and travel. This will support you to minimize your cost. At the end of the month you can save more money.
2. Create a budget: The key is to be realistic. you will have to make some sacrifices but you don’t live in hand to mouth. “Cutting back is more effective than cutting out,” says Gail Cunningham, spokeswomen for the National Foundation for Credit Counseling, accredited agency for credit counseling firms.
3. Track Your progress: While you don’t want to spend every day fretting over bills, keep an eye on your spending. Revisit your progress every month. You don’t want this to consume your life. It took you a while to get into a debt and it going to take a while to get out of it.
This is the basic but more effective way to save money, minimizing the cost and get off your debt.
Here are my top tips to get rid of credit card debt:
Pay It Off
Duh, right? The best way to get out of debt is to pay it off. It’s a basic common sense idea that is novel in today’s society. It is an idea that shouldn’t even be an idea but since so many people are in debt it is revolutionary. Pay off your debt. The question is how do you do that? Well, it isn’t easy but it can be done if you are willing. You need to be willing to do three things in order to get rid of credit card debt.
The first thing you must do is start cutting as many expenses as possible. This will take a lot of time and effort because it means you need to sift through all of your bills and find out exactly what you are paying for and what you can get rid of. Things, like reducing your phone bill and conserving electricity, are great ways to start. Do you really need the unlimited data plan? In addition, how important is it that you have all the cable channels? How about eliminating your TV bill altogether and only having Netflix? Or maybe get rid of Netflix and only have TV. You need to take a hard look at all of your bills and see how many things you can live without. Notice I said your bills, not your spouses or the expenses for the kids. Look at yours and then look at everyone as a whole.
An important part of cutting expenses is making sacrifices. In order for you to get rid of your credit card debt you need to make sacrifices. That means you may not get to have TV for a while. You may have to reduce your electricity bill by unplugging devices when they are not in use. You may even have to stop going out to eat, quit the bowling league, stop getting your favorite magazine, no more trips to the salon, et cetera. Whatever the case may be, you need to make sacrifices. You put yourself in debt because you were unwilling to make sacrifices. You gave into instant gratification because you had to have something right away. Now you must sacrifice so you are no longer working to pay the lenders.
If you really want to get out of debt then you will also need to start working harder. That doesn’t mean working like a dog until your bones break. No, it means picking up some overtime, working extra hours, maybe even getting a second, third, or fourth job. You need to find some more hours to work so that you can start bringing in some extra money. Then, take that extra money and put it all towards your debt. Don’t take a vacation. Pay off your debt! You aren’t going to have to work like a slave forever. Only until you are out of debt. The borrower is slave to the lender and you need to work to get out of debt.
Getting out of debt is never easy. However, you got yourself into debt, whether through your own spending or your lack of counsel and someone else’s spending, so it is up to you to get yourself out of debt. You can receive help and advice but it is up to you to make the payments. It is going to take hard work, determination, and sacrifice but you can do it. You will do it and then you will be free because you’ll never want to go through it again.
1. Make a plan, and stick with it. Set a dollar amount to go toward your debt and stick to it every month, just as you would with a fixed loan payment.
2. Become interested in your interest rates. Many don’t know the interest rate on each of their credit cards, but this is critical in optimizing a payment schedule. To minimize interest paid, pay minimum payments on lower interest rates, and allocate the rest of your payment budget to the highest interest card.
3. Manage your spending. Take a look at how much you’re spending every month and determine what you can cut back on, using those savings to pay your balances faster and to avoid more interest. Ideally, you won’t be adding to your credit card balances as you pay down your debt, but if you must, use the card with the lowest interest rate.
Nate Matherson – LendEDU
1. Consider refinancing with a personal loan
Did you know that you can refinance credit card debt? Consumers with meaningful amounts of credit card debt could save money by refinancing credit card debt into an unsecured personal loan. The interest rates charged on credit cards can be as high as 29.99%. And, the interest rates charged on credit cards are almost always variable. However, personal loan interest rates can be in the low to mid-single digits. And, personal loans most often have fixed interest rates. By refinancing revolving debt (ex. credit card debt) into a personal loan, consumers can in effect put together a debt payoff plan and timeline.
2. Don’t sign-up for additional cards!
The days of big sign-up bonuses are upon us. Credit card companies have started offering even bigger sign-up bonuses to attract new customers.
If you are currently paying down credit card debt you should avoid opening up new credit cards. The sign-up bonuses aren’t going anywhere anytime soon. Wait to open up new credit cards until your current balances are paid off.
3. Set your financial goals with family and friends.
Are you looking to get rid of credit card debt in 2018? You should consider setting a financial resolution for 2018. And, you should set financial resolutions with family and friends. Research has shown that if you set financial resolutions with your family and friends you will be more likely to achieve your goals. Accountability in credit card payoff is so important!
1. Instead of just paying the minimum every month, add at least 25% beyond that to all your cards except (2).
2. If you have multiple credit cards with balances, try to pay off the ones with the least amount of debt right away; psychologically, you will then have only one or two cards that nag at you to pay them down
3. Think twice about using a card every time for relatively small purchases below $20. Carry more cash.
1. Employ a systematic, repeatable process to attack the problem. Putting out the latest credit card “fire” each month doesn’t accomplish more than temporarily fixing the problem. Putting the same amount to each card each month will create peace and sense of predictability as you tackle paying down your balances.
2. Automate your payments. Instead of waiting until the last date (or, worse yet, allowing yourself to get change a late fee), consider making as many payments automatically deducted from your checking account as possible. Human behavior can often be our worst enemy, and removing the temptation to delay or skip a payment will help significantly in the long run.
3. Consider the “snowball” effect. Assuming interest rates are all comparable, over-pay on your smallest balance first while maintaining minimum non-penalty payments on all the other cards. You’ll have it paid off more quickly than the others and, as soon as that’s done, you can “snowball” that payment fully onto the next smallest balance. Often the urge to pay down aggressively on the largest balance is strong, but the feeling of accomplishment at completely removing a card balance from the picture is even more significant.
1. Stop Using Your Cards: If you are struggling with credit card debt one of your first steps should be switching to a cash budget. It is hard to pay off current debt if you are continually accruing more. This is especially important for non-fixed expenses. Using cash creates a natural spending limit. This will force you to stick to a budget while you are working on paying off debt.
2. Make a Plan: “Spending less” is not a solid debt relief plan. Create a very specific plan. Take time to look at your current expenses and see where you can afford to cut back. Are you going out to eat every week? Are you paying for monthly streaming accounts? Are you getting a car wash every week? Record all the areas you can reduce expenses. Make a budget. What can you really afford to spend every month? Once you have a set budget determine how much you can put towards paying off debt and how long it will take you to be debt free. Stick to your plan.
3. Consolidate: If you have multiple credit cards and high-interest rates you may benefit from consolidating your debt. There are several ways to do this, such as transferring to a low-interest credit card, taking out a personal loan, or working with a credit counseling agency. All three methods can potentially lower your interest rates, saving you hundreds to thousands of dollars. Additionally, combining your credit card debt to one account will simplify the payoff process.
We have a lot of experience with this challenge and our top 3 tips to get rid of credit card debt are:
1. Set yourself a goal of when you want to have your credit card debt paid off by and then work out how much per week you will need to repay to make this happen. Use an online savings goals calculator to help you as it will include your interest repayments so you know exactly what the weekly payments will need to be.
2. Do a budget and work out what your necessary expenses are – know the difference between necessary and unnecessary expenses and reduce (or get rid of) the unnecessary ones straight away.
3. Redirect the funds saved from unnecessary expenses or any extra cash you have left over, after doing your budget. Put this on to your credit card and break the payment down into weekly amounts so each time you make a payment you feel like you’re getting ahead.
Here are my Top 3 Tips to Get Rid of CC Debt
1. Get incredibly clear on your situation and your big goal.
- What is the interest rate(s) on your credit cards? If you have more than one, prioritize paying off the one with the highest interest first and/or consolidating debt to a lower interest option.
- Know exactly how much you are trying to save to pay off your debt
2. Track everything
- It is nearly impossible to change a habit you are unaware of. Spend 30 days tracking every penny you spend and be amazed as the answers reveal themselves to you. Notice where your money is going and figure out where there’s room to make different choices that serve your big goal.
- Consider tracking apps like Wally, tracking via spreadsheet or just jotting down all expenses with pen and paper. No matter how you do it, develop a routine to record where your money goes so that you can make informed decisions about how to improve what you save.
3. Create a realistic budget.
- Once you’ve tracked your expenses for a month, you’re ready to create a budget. You’ll know where your money is going and how much you actually need to make it through the month. Use that information to create a budget that allows you to put larger sums towards your credit card balances but don’t forget to give yourself a cushion. Your budget needs to be realistic if you want to actually stick to it and achieve your big goal. Make sure there’s money included to have some fun or invest in your passions/hobbies. Otherwise, your budget will start to feel like deprivation and you could quit before you reach your goal. So intentionally put a set amount a reasonable amount of money aside each and every month to focus on things that bring you joy.
If you cant find some solutions there then you are not looking hard enough. Some incredibly useful and practical tips to really knock down your credit card debt and fast. A big thankyou to all the experts for sharing their best advice and I hope you use this knowledge to be free from credit card debts in 2018.
If you have any questions or some great advice you would like to share as well please let me know in the comments below and remeber that sharing is caring. If you found at least one useful thing in this post, then help us spread it by sharing it with your friends and followers!